Spain’s benchmark securities fell for the third time in
four days after Foreign Minister Jose Manuel Garcia-Margallo
said any referendum on independence called by Catalonia would
amount to a coup d’etat. Greek bonds rose as Prime Minister
Antonis Samaras won the support of enough lawmakers to secure
approval for next year’s budget. Austrian and Belgian 10-year
yields dropped to records as investors sought safer assets.
Finance ministers were scheduled to meet at 5 p.m. in Brussels.

“The problems for Spain are still very much there, the
banking system is in deep trouble, as are its regions,” said
Marc Ostwald, a rates strategist at Monument Securities Ltd. in
London. “The efforts to play down expectations that anything
might come from the finance minister meetings have been
extraordinary and this is unsettling the market.”

Spain’s 10-year yield increased seven basis points, or 0.07
percentage point, to 5.89 percent as of 4:51 p.m. London time,
after rising to 5.90 percent, the most since Oct. 11. The 5.85
percent security due in January 2022 fell 0.46, or 4.60 euros
per 1,000-euro ($1,271) face amount, to 99.695. The nation’s
two-year yield climbed 10 basis points to 3.23 percent.

Garcia-Margallo said Spain’s Constitutional Court would
annul any referendum called by Catalan President Artur Mas’s
government in Barcelona. That means any vote would be “clearly
illegal, a coup d’etat in legal terms,” he said in an interview
with Cope radio today.

The finance ministers will assess whether the latest round
of cuts that Samaras squeezed through parliament with 153 of 300
votes, are sufficient to warrant further aid.

The European Commission, the International Monetary Fund
and the European Central Bank, which oversee Greece’s bailouts,
said the country may require an additional 15 billion euros
through 2014 and 17.6 billion euros in the two following years,
according to a draft of the so-called troika’s report obtained
by Bloomberg.

The yield on Greece’s 2 percent bond due February 2023
dropped 11 basis points to 17.88 percent, leaving the price at
31.035 percent of face value.

Debt Auctions

This week sees the most debt sold by euro-region nations
until the end of 2012, Royal Bank of Canada analysts led by
London-based senior economist James Ashley wrote today in an e-mailed note.

Greece is due to sell as much as 3.125 billion euros of 28-and 91-day bills tomorrow. It last sold 91-day securities on
Oct. 16 at an average yield of 4.24 percent.

The Netherlands is scheduled to sell as much as three
billion euros of bonds maturing in 2022 tomorrow, before Italy
auctions a total of five billion euros of debt on Nov. 14.
Germany will sell five billion euros of two-year notes the same
day, while France auctions as much as nine billion euros of
bonds and inflation-linked securities on Nov. 15.

Belgium’s 10-year rate declined three basis points to 2.279
percent, the lowest since Bloomberg started collecting the data
in 1993. The yield on similar-maturity Austrian securities
slipped to 1.788 percent, also the least since 1993.

‘Very Supportive’

“The environment remains very supportive for core
markets,” said Patrick Jacq, a senior fixed-income strategist
at BNP Paribas SA in Paris. “There is room for lower bund
yields in coming months from an economic and risk perspective,
although the pace of the move may slow.”

Germany’s 10-year bund yield was at 1.34 percent. It
declined to 1.31 percent on Nov. 9, the lowest since Aug. 31.

Two-year notes yielded minus 0.036 percent. The rate
dropped to minus 0.055 percent on Nov. 7, the least since Aug.
13. A negative yield means investors who hold the security until
it matures will receive less than they paid to buy it.

Volatility on Greek bonds was the highest in euro-region
markets today, followed by those of Ireland, according to
measures of 10-year or equivalent-maturity debt, the spread
between two- and 10-year securities, and credit default swaps.

Ireland’s National Treasury Management Agency is planning a
long-term debt issue, the Irish Sunday Business Post reported
yesterday, citing unidentified people in the market.

The nation’s five-year note yield was little changed at
3.45 percent.

Spanish securities gained 2.4 percent this year through
Nov. 9, according to indexes compiled by Bloomberg and the
European Federation of Financial Analysts Societies. German
bonds returned 4 percent.